Tag: Motley Fool

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

In case you missed it, Square (NYSE: SQ) in December launched a streetwear collection based on its Cash App brand. No, this financial services and digital payments company isn’t suddenly pivoting into the apparel business. Instead, the “Cash by Cash App” store served as a demonstration of a much-bigger opportunity for Square.

The online store features a big button at checkout encouraging shoppers to check out with Cash App. And Square has plans to expand that checkout button to more online merchants, taking on PayPal Holdings‘ (NASDAQ: PYPL) core business.

What Square’s working on

A couple of job listings for Square indicate it wants to expand the checkout feature in some form. “The Commerce team is building new retail payment experiences on Cash App that leverage our vast omnichannel Seller ecosystem at Square,” job listings for a software engineer and engineering manager explain. 

Square revamped its online store product a couple of years ago following the acquisition of Weebly, and it’s seen strong growth since. Management said online channel gross payment volume, or GPV, has grown greater than 50% in each of the past two years. Additionally, omnichannel merchants (a category that combines online and in-store sales) now account for the majority of Square’s GPV, following the shift in consumer behavior during the pandemic.

A big advantage PayPal has over start-ups is that it’s already developed a massive network of both merchants and customers, and both groups trust PayPal with their payment information. But now Square finds itself with a sizable base of merchants using its online store and 36 million Cash App users. There’s a real opportunity to connect the two ecosystems.

“[Y]ou can imagine where it might go as we make it even faster, we make it even easier,” CEO Jack Dorsey said of the Cash by Cash App experiment during Square’s fourth-quarter earnings call. “And I think it draws both on the Cash App ecosystem and as acquisition opportunities there and also for the Seller ecosystem and has an opportunity there.”

Customer acquisition will be the prime area of focus for Square’s $850 million in incremental operating expenses this year. The current per-customer acquisition cost for Cash App is less than $5, management said. Increasing that and re-engaging the 50 million Cash App users not actively using the service could go a long way toward catching up with PayPal. As of the end of 2020, PayPal counted nearly 350 million active consumer accounts.

Bringing the option in-store

If Square can get more merchants and customers used to the idea of using Cash App to pay businesses, there’s potential for Square to bring the same concept into brick-and-mortar stores. That’s a big area of interest for PayPal, which has pushed QR codes and other in-store digital payment options over the last year. But Square already has the in-store merchant relations to lean on.

To be clear, there’s no indication Square’s working on in-store payments with Cash App.

But as both sides of the network continue to grow, it seems like only a matter of time before Square will work on a project to provide faster and lower-cost in-store payments with Cash App.

“I think both Cash App and the Seller business have an opportunity to strengthen each other. And we’re showing that off a little bit with Cash by Cash App, but there’s a lot more to come,” Dorsey said on the fourth-quarter call.

A big opportunity for Square’s bottom line

Investors shouldn’t overlook the opportunity for Cash App payments to merchants. Using the Cash App instead of processing a payment card allows Square to bypass the payment networks, saving nearly all of its costs of processing payments. Square requires Cash App users to load their digital wallet with a bank transfer, debit card, or direct deposit. All three have much lower costs than processing a credit card as PayPal does for most payments.

That’s an opportunity for Square to keep more of each payment for itself and help its merchants save on processing fees as well. More profitable payment processing for Square, less expensive processing for sellers, and more convenient payment options for consumers is a win-win-win.

And Square is well-positioned to drive adoption of any new payment service it launches thanks to Boost, which it’s been using to promote more and more Cash App features. Boost gives rebates to users for performing certain actions within Cash App like using the Cash Card at certain merchants or making a direct deposit.

Square is gearing up to take on PayPal’s core business. It has a lot of the pieces in place and the money to spend to take on the fintech giant.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Adam Levy has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings and Square and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The McGrath Ltd (ASX: MEA) share price has climbed 1.6% in early trade after a late afternoon announcement from the Aussie property management group on Tuesday.

Why is the McGrath share price climbing?

The McGrath share price is lifting after an update on its Oxygen Home Loans business (Oxygen). According to the release, the group has entered into a transaction “that will deliver enhanced scale and optimisation” of the Oxygen business.

Oxygen has raised an additional $2.5 million via a cash injection from a consortium. The consortium led by Doc Klotz, Ben Taylor and Sturt Capital Partners, will take a 55% controlling interest in Oxygen.

McGrath will reduce its interest in Oxygen to a 45 per cent shareholding in the hope of propelling further growth. The Aussie property group will also receive a cash payment in three years of $1.8 million.

The McGrath share price has jumped higher on the back of yesterday’s announcement. At the time of writing, shares in the property management group were trading at $0.65 per share.

McGrath will enter a referral agreement with Oxygen and retain one of three board seats. McGrath CEO Eddie Law said the transaction can “unlock the significant potential the merged business will deliver across our platform”.

“A more simplified process of writing loans will make it easier for our sales agents to facilitate mortgage delivery to buyers”, he added.

The McGrath share price has performed strongly in 2021, climbing 39.1 per cent year-to-date through to Tuesday’s close. That is a significant outperformance over many of its peers and well above the 2.6 per cent gain for the All Ordinaries Index (ASX: XAO).

At the time of writing, McGrath has a market capitalisation of $106.7 million and is trading at an 11.1 price to earnings (P/E) ratio.

Foolish takeaway

The McGrath share price has jumped higher in early trade following a late afternoon announcement yesterday.

McGrath will reduce its shareholding in Oxygen Home Loans while retaining a controlling stake and board seat.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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When you’re young and first start investing you might focus on growth shares that provide you with the potential for outsized returns. Shares like Afterpay Ltd (ASX: APT) and Zip Co Limited (ASX: Z1P) immediately come to mind.

After all, if your investments don’t go to plan, you have time on your side to recover from your losses.

But as you enter retirement, it may be prudent to limit your exposure to these type of investments and focus on those that offer income and capital preservation.

With that in mind, I have picked out a couple of ASX shares that could be good options for retirees right now. They are as follows:

Goodman Group (ASX: GMG)

Goodman Group could be a good option for retirees. While its shares may not offer the biggest yield, the integrated commercial and industrial property group looks well-placed to grow its earnings and distribution at a solid rate over the next decade.

This is due to its exposure to a number of markets benefiting from structural tailwinds, such as the ecommerce market.

One broker that expects this to be the case is Macquarie. It recently upgraded its shares to a buy rating with a $20.39 price target. The broker believes Goodman can grow its earnings by at least 10% per annum through to FY 2024.

Its analysts are also forecasting a 30 cents per share distribution in FY 2021. This represents a 1.6% yield.

National Storage REIT (ASX: NSR)

National Storage is a leading self-storage focused real estate investment trust. It is one of the largest self-storage operators in the ANZ region with a network of over 200 centres. But it doesn’t plan to stop there. The company continues to see room to expand its network in the future via its development projects and growth through acquisition strategy.

This should support solid income and distribution growth over the next decade, especially given the improving housing market. This traditionally results in growing demand for its services as people move homes or downsize.

For now, management expects to report underlying earnings per share of 7.7 cents to 8.3 cents in FY 2021. It also plans to pay 90% to 100% of its earnings out to shareholders as distributions.

Based on the middle of this guidance range, its shares offer investors a forward 3.6% dividend yield.

More reading

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• Where to reinvest your Telstra (ASX:TLS) dividends

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bod Australia Ltd (ASX: BDA) share price is on the run during early morning trade. This comes after the company announced its first purchased order for the United States market. At the time of writing, the cannabis healthcare company’s shares are swapping hands for 50 cents, up 5.26%.

What did Bod announce?

Investors are scrambling to buy Bod shares following its latest positive update in a bid to expand its revenue base.

According to this morning’s release, Bod advised it has received its initial binding purchase order from Health & Happiness Group. The first of multiple orders for the CBD products are set to be launched into the United States market. This also includes three full-spectrum CBD oil extracts under its premium brand name, CBII.

The products will be available to consumers directly through ecommercial channels sometime in the current first-half of the calendar year. Consequently, Health & Happiness will commence marketing and brand campaigns to create awareness and drive sales in the United States.

The maiden order is valued at $312,000, in which Bod will received a royalty on net product sales. In addition, a cost-plus margin for the supply of the finished goods is also set to create addition revenue streams for Bod.

Delivery of the first lot of CBD products is expected to arrive in the coming months.

The addressable market for CBD consumer products in the United States is estimated to reach around US$6.9 billion by 2025. This represents four times the size that of the United Kingdom’s CBD market.

Comments from the CEO

Bod CEO Jo Patterson commented:

The first US purchase order is an exciting step for Bod on two fronts, firstly as it’s growing our global footprint, and secondly the US offers a significant opportunity for consumer healthcare CBD products.

Bod will continue to work with H&H to progress additional opportunities in North America. We look forward to updating shareholders on more purchase orders soon.

About the share price

Over the last 12 months, the Bod share price has accelerated to more than 100%, but is relatively flat year-to-date. The company’s shares reached a 52-week high of 74 cents last December, before moving in circles.

Based on the current share price, Bod has a market capitalisation of roughly $50.2 million, with 105.8 million shares outstanding.

More reading

• Why the COSOL (ASX:COS) share price is running 6% higher
• Here’s why the NextDC (ASX:NXT) share price is racing higher
• Acquisitions and spin-offs put these 3 ASX shares on brokers’ “buy” list
• EML Payments (ASX:EML) share price jumps to record high on acquisition news
• The Australian economy will recover from COVID-19 this year, says IMF

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The COSOL Ltd (ASX: COS) share price opened 6% higher today after receiving an extension to its Department of Defence Enterprise Resource Planning (ERP) program. 

At the time of writing, the COSOL share price is up 5.7%, trading at 74 cents.

Let’s take a look at what the Brisbane-based digital business solutions provider announced in its release today.

About the project extension

The Department of Defence ERP software upgrade is a well-publicised program anticipated to be a $1 billion project that could take up to eight years to complete. Back in July 2019, IBM claimed a $95.5 million one-year contract that covered the initial design work for the SAP-based ERP upgrade. 

On Tuesday, IBM subcontracted COSOL to provide its proprietary IP and professional data migration services for the Department of Defence program. 

COSAL valued the current project work at $8.5 million of revenue and expects to complete the work between April 2021 and December 2022. The project will positively contribute to the company’s FY21 earnings.

Management commentary 

COSOL Australia CEO Scott McGowan believes the contract reflects the longstanding relationship with IBM and the company’s proven expertise to deliver solutions to the defence sector. 

COSOL is thrilled to be partnering with IBM and the Department of Defence. The fact that COSOL has been contracted for end to end data migration responsibility demonstrates the confidence that IBM and the Department have in COSOL to deliver this complex project.

We also want to acknowledge and thank IBM for their commitment to the Australian SME community. The award of this new work is the latest win from COSOL’s strategic pipeline of SAP data migration opportunities based on the strength of COSOL’s digital transformation expertise and capabilities.

COSOL share price snapshot 

COSOL was one of last year’s best performing initial public offerings (IPOs), surging from a listing price of 20 cents in January 2020 to a high of 93 cents by August 2020. Its shares have taken a breather and are currently trading around the 70 cent level, which represents a market capitalisation just shy of $100 million.

Despite its size, the company does make a profit, with its half-year results highlighting a 36% increase in net profit to $1.8 million and 45.4% increase in revenue to $15.65 million. The company believes its 2H21 revenue is expected to be 23-25% above 1H21. 

More reading

• Bod (ASX:BDA) share price soars on United States market entry
• Here’s why the NextDC (ASX:NXT) share price is racing higher
• Acquisitions and spin-offs put these 3 ASX shares on brokers’ “buy” list
• EML Payments (ASX:EML) share price jumps to record high on acquisition news
• The Australian economy will recover from COVID-19 this year, says IMF

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The NextDC Ltd (ASX: NXT) share price has been a positive performer on Wednesday.

In morning trade, the data centre operator’s shares are up 4% to $11.45.

Why is the NEXTDC share price charging higher?

Investors have been buying NextDC shares following the release of a bullish broker note out of Goldman Sachs this morning.

According to the note, the broker has reiterated its buy rating, added the company to its conviction list, and lifted its price target to $15.00.

Based on the latest NextDC share price, this implies potential upside of 31%.

What did the broker say?

Goldman Sachs recently hosted a number of data centre meetings with a range of industry participants. These meetings have collectively reinforced its positive view on NextDC.

The broker listed four key takeaways from these events. They are summarised below:

(1) Demand remains very strong, with ‘waves’ of demand to continue but potentially larger and more spaced out than previously, while the quantum of deployments continues to surprise (i.e. individual orders of 20-40MW);

(2) Pricing (and hence returns) remains healthy in Australia across all operators, supporting our return expectations (we forecast 11.3% ROIC on NXT’s S3 facility);

(3) NXT is likely to progress its S4/M4 facility as a JV, away from the CBD, while keeping optionality to undertake a JV for part of M3/S3; and

(4) International is strategically sound, but unlikely to progress while borders are closed.

High multiples are not a concern

While Goldman acknowledges that there are concerns around equity valuations due to rising bond yields, it believes NextDC’s shares are more than deserving to trade at a premium.

Goldman explained: “We note investor concerns around the expected increase in inflation that is impacting equity valuations. However we believe the strong growth outlook for NextDC remains compelling, particularly given its hyperscale contracts have inflation escalators embedded within them.”

“As a result, with NXT having pulled back -23% since its Oct-20 high ($14.10; vs ASX200 +10% ) despite subsequently upgrading FY21 guidance, we see now see a more compelling investment opportunity. With our $15.00 TP implying +36% upside, amongst the highest in our TMTG coverage, we re-iterate our Buy and add NXT to the ANZ Conviction List,” it concluded.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Nothing like acquisitions and spin-offs to liven things up, and leading brokers have just slapped a “buy” on these ASX shares in the corporate action spotlight!

We can thank near-zero interest rates for the pick-up in such activities too. Cheap debt and high share prices are prompting companies to hunt for inorganic opportunities.

Brokers have picked three that they believe will outperform the S&P/ASX 200 Index (Index:^AXJO).

Cleaning up

One ASX share that is grabbing the M&A headlines is the Cleanaway Waste Management Ltd (ASX: CWY) share price.

Cleanaway intends to buy the local operations of Suez Groupe for $2.5 billion. This prompted JPMorgan to reiterated its “overweight” recommendation on the waste management business as it sees the acquisition as a “transformative transaction”.

Acquisition puts the ASX share on the buy list

“We view the transaction as compelling for CWY given Suez’s prized infrastructure assets, in particular the Sydney metro Post Collection assets which has been a material gap in CWY’s national footprint,” said the broker.

“While the transaction is ‘EPS accretive’, we believe there is meaningful valuation accretion as CWY’s overall business mix shifts further to infrastructure-like assets as well as longer duration Municipal contracts.”

However, there’s no guarantee the acquisition will be completed and there’re still questions about the capital structure of the group post the takeover.

JPMorgan’s 12-month price target on the Cleanaway share price is $2.60 a share.

Looking greener and more attractive

One ASX share that caught the eye of UBS is the South32 Ltd (ASX: S32) share price. The broker reiterated its “buy” recommendation on the miner as the sale of its coal asset (SAEC) to Seriti looks imminent.

“In our opinion, the exit of SAEC is still a positive as it makes S32 greener & leaner (removing ~40% of employees & 25% of capex),” said UBS.

“Seriti still assumes SAEC’s $875m closure liability, so the exit is NPV & earnings accretive.”

Capital return is one reason to buy the ASX share

As South32 indicated it doesn’t intend to hold on to the excess cash from the sale, UBS sees a $100 million to $200 million capital return for shareholders once the deal is completed.

Further, the broker anticipates a positive quarterly production update from South32 later this month and has lifted its 12-month price target on the South32 share price to $3.20 from $3.05 a share.

Clear buy signal

Another acquisitive ASX share that’s worth buying is the Codan Limited (ASX: CDA) share price, according to Canaccord Genuity.

The broker repeated its “buy” recommendation on the Codan share price following last week’s announcement that it was buying Zetron Inc. for US$45 million.

“We have upgraded our target price to $17.10 per share ($16.60 previously),” said the broker.

“This is based on an 18.0x FY22e EBIT multiple, which is a 15% premium to the XSO average. We believe a premium is warranted given the above-average EPS growth outlook, and upside risk to earnings.”

Zetron provides critical communications to first responders in rural and regional areas in the US.

More reading

• The Australian economy will recover from COVID-19 this year, says IMF
• 2 ASX sectors where dividend shares will go backwards this year
• 2 great ASX 200 blue chip shares for dividends
• 5 things to watch on the ASX 200 on Wednesday
• Why ASX 200 shares are at a 6-week high

Motley Fool contributor Brendon Lau owns shares of South32 Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The EML Payments Ltd (ASX: EML) share price is charging higher on Wednesday following the announcement of a major acquisition.

In morning trade, the payments company’s shares are up 12% to a record high of $5.75.

What did EML Payments announce?

EML Payments has entered into a binding share purchase agreement to acquire 100% of Sentenial Limited and its wholly owned subsidiaries. This includes its open banking product, Nuapay.

According to the release, the two parties have agreed an upfront enterprise value of 70 million euros (A$108.6 million), plus an earn-out component of up to 40 million euros (A$62.1 million). This will be funded by a combination of 38.9 million euros in cash and 31.1 million in EML Payments shares.

What is Sentenial?

Sentenial is a leading European Open Banking and Account-to-Account (A2A) payments provider, utilising a cloud-native, API-first, full stack enterprise grade payment platform.

The release notes that it has an attractive customer base across banking, corporate, and software industries. This includes 4 of the top 7 banks in the United Kingdom and some of the largest merchant acquirers in Europe.

Its Nuapay business is one of only a few Open Banking products in the marketplace. It provides merchants and payment service providers with a feature rich Open Banking solution, including interwoven money movement capabilities, reconciliation, and batch settlement of transactions.

Why acquire Sentenial?

The company sees the combination of the EML and Nuapay platforms and capabilities as an opportunity to deepen customer relationships, enter new industry verticals, and diversify its revenue streams.

Management also notes that the acquisition broadens the company’s payment offerings to include alternate (non-card, non-scheme) payment products to its platform. This addresses customer demand and complements card scheme-based payments.

Another positive is that Sentenial has a highly scalable platform that has had continual investment to future proof the business and allow for agile deployments and rapid growth. In light of this, EML Payments believes it is well positioned to export the technology globally and has plans to leverage the Sentenial platform into Australia and North America within the next 12-18 months.

Once the acquisition completes, the combined group is expected to process in excess of A$90 billion in Gross Debit Volume (GDV) in FY 2022.

Management commentary

EML’s Managing Director & Group CEO, Tom Cregan, said: “EML has transitioned over the years from primarily a gift-card company to a company with a diverse revenue base across multiple prepaid products. The acquisition of Sentenial will be the next evolution for EML, as we transition into a broader payments business by adding instant account-to-account (Open Banking) payments into our suite of solutions for current and prospective customers.”

“EML supports thousands of prepaid programmes globally, and our platform is how our customers interact with us. Sentenial operates an enterprise-grade payments platform processing over 45 billion Euro per annum, and it’s, therefore, a similar business to EML but servicing a different customer set with different payment types. The net result of bringing the companies together allows EML to increase our Total Addressable Market by expanding our product suite, and we see a number of opportunities to cross-sell Account to Account payments into existing EML customers, and vice versa.”

More reading

• 3 ASX shares to buy in April 2021
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• Is the EML (ASX:EML) share price a top buy right now?

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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 The Australian economy’s growth has been forecast to increase more than was first predicted for 2021. The International Monetary Fund (IMF) updated its 2021 global economic growth forecast yesterday. It has increased Australia’s expected GDP growth to 4.5%.

This means Australia could recover from the pandemic-spurred economic downturn this year, after GDP shrunk by 2.4% in 2020.

Beyond Australia, the global economy is projected to grow 6% in 2021.

IMF’s prediction of the Australian economy’s future

Australia’s economy looks like it could be steadying after a turbulent 2020.

At the time of writing, the S&P/ASX 200 (ASX: XJO) has bounced 31.1% since this time last year.

The Reserve Bank of Australia is still holding the official cash rate at 0.1%. It’s not expected to be lifted until at least late 2023.

According to the Sydney Morning Herald, RBA’s governor Philip Lowe has said it won’t increase interest rates until inflation was between 2% and 3%. The IMF predicts Australia will reach 2% inflation in 2024.

Future IMF predictions state Australia’s GPD growth may slow in the coming years. It’s estimated our GPD growth will be 2.8% in 2022, 2.3% in 2023 and 2.2% in 2024.

For comparison, between 2013 and 2019 Australia’s GDP growth stayed between 2.1% and 2.8%.

Simultaneously, our housing prices are increasing exponentially. Motley Fool Australia’s Scott Phillips spoke of Australia’s increasing house prices on Sky News First Edition yesterday.

Global growth forecast

The IMF predicts the economies that suffer most in the coming years will be those of low-income nations.

It also predicts the global economy will grow by 6% in 2021, seemingly led by those hit hardest by the coronavirus pandemic.

India is among the economies the IMF forecasted would have the highest growth in 2021. It is predicted to grow by 12.5%, recovering from its drop of 8% in 2020.

The United Kingdom’s GDP is predicted to bounce back from its 5.3% drop in 2020 to grow by 9.9% in 2021.

The United States’ economy wasn’t hit as hard as others in 2020. Its GDP is predicted to overcome its 3.5% fall by rising 6.4% in 2021.

Finally, China’s GDP saw a drop similar to Australia’s in 2020, falling by 2.3%. Though, the IMF predicts it will experience an 8.4% growth in 2021.

More reading

• 2 ASX sectors where dividend shares will go backwards this year
• 2 great ASX 200 blue chip shares for dividends
• 5 things to watch on the ASX 200 on Wednesday
• Why ASX 200 shares are at a 6-week high
• Why the Webjet (ASX:WEB) share price closed 5% higher today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Westpac Banking Corp (ASX: WBC) share price is edging lower following the release of an announcement.

At the time of writing, the bank’s shares are down 0.1% to $24.67.

What did Westpac announce?

This morning the banking giant confirmed that the Australian Prudential Regulation Authority (APRA) has approved its Integrated Plan that was developed in response to the Enforceable Undertaking. The latter followed an investigation by the financial crime watchdog AUSTRAC into alleged breaches of anti-money laundering and counter-terrorism financing laws.

Under the terms of the Enforceable Undertaking, which Westpac entered into on 3 December 2020, Westpac was required to submit for APRA approval a detailed integrated plan that outlines all major remediation activities related to risk governance.

In addition to this, the plan was required to have clear timelines and specify who is accountable for delivery. It also outlines commitments designed to strengthen all aspects of Westpac’s risk governance across both financial and non-financial risk.

What else?

Management notes that another requirement of the Enforceable Undertaking is that the integrated plan is independently assured.

In response to this, Westpac appointed Promontory Australasia to provide quarterly assurance and intends to release their reports bi-annually. The first report for the period up to 1 March 2021, has been released today. You can read about it here.

In the report, Promontory Australasia acknowledges the completeness of Westpac’s integrated plan, as it expands on its existing Customer Outcomes and Risk Excellence (CORE) Program. The consulting firm also notes that appropriate governance and accountability structures are in place to support effective implementation of the plan.

Westpac’s CEO, Peter King, said: “Our Integrated Plan outlines a comprehensive program of work to ensure the bank’s risk culture and risk governance meet the high standards expected of us. We have made progress on improving our management of risk over the past 12 months, however there is much more work to do to ensure sustainable change. The implementation of our Integrated Plan is a critical part of delivering on our Fix, Simplify, Perform strategic priorities and is one of my top focus areas.”

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Westpac (ASX:WBC) share price lower on APRA update appeared first on The Motley Fool Australia.

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